The Story of Banks

SAVINGS AND LOAN
ASSOCIATION

UmB

FEDERAL RESERVE
BANK

MUTUAL
SAVINGS
BANK

CREDIT UNION
FEDERAL RESERVE BANK OF NEW YORK

'We've pet/vexep au oc//*
wterzece n? r*/e pft/s, **&
rap Pet' <?iv/v£jes jmv£ /WP
US. M?>v, W£'0 MfTT&M

/?e~r0S/7' r*/e M0s/ey //v
oc/# c#e~CK//v6 Jcc0u/sr.

WgLCOMe To rue BANK,
THIS IS A c&MMmwetAi
which Atf/W« we rxK£
AA/P MAKSf 1.&AAIS
(M0tW0ilA0& AA/P &US>,

e/v/vy.
&Aa/a: ,

TO i

* : - -n

li ^

>>^ rata

^1 Vi/i

V ^** yfff^

i *1l

m -*\:JHk2^ i

F^t^^tt*

1 \1

L 1

I \\ x^

l*A o^^l

t^^JPyiM

TPBPB AATB ALSO SAWA/&S
AM? LOANS AA/P MUTUAL.
SAV/A/&S BAA/KS THAT
TAKe PePCSfTS AAtD
A4AKB LPAA/S PP/AAAPlLY
POX UCMB 0U/LP/AA3 AA/P

A*?A*r<SA&es , aa/p

CA?BP 'IT L/AS/PA/S THAT
P'PPWPe CPSSSL/AABP
LOAA/S POP TMe//Z

SlA/CB ALL THBSe PLACBS ACCePT pbppsit& ,

Tuev'Afe xaipwa/ as -pe-PosiTPAry /a/st/Tl/T/pa/S.

0UT AAPST PePP"L& 7V///VA PP- TUe-Asl AS

baa/ats, s>o yve'LL vlist call, TfMSM 0ANM&

you see, obaiaiy, with oup

fr&.Pl POOPS) ACCPUA/T
WE- CAA/ WPITB AS, MAAjy

cue-ens as we'& cike ro>

PAY PLlP 0ILLS WITHOUT
HAV/A/& TO LJEAV& THB
PPPICB TO &BT A STACK

op MOA/ey pppl=p&. plus,
we caai use a cub-cm re
BUY SOMETHING lAf A
STPP?e, such /*s tps A/ew
computbp we WAA/T

j=-o# Tf*et pp^-p'-fce.

IN 2006, ABOUT SO
BILLION CHECK? WERE
WRITTEN. THAT € AN
AVERAGE OF MORE THAN
02 MILLION CHECKS EACH
ANP EVERY PAY.

UEY, BUT DOH'r FOR&ET,

we have t<=> tsAve A40fiv£-y
//v oat* aoc-oua/t 0&f=c'/?£-

YOU W/tirE- A CUE-OK. //=
we oo/s/'t, we'z.L. ua\/£- ^

THAT Af£A/VS THE C»ECt<>
W/i-L BE- WC»?THi-E£>Z
Aa/O »&OUA/C&," Afi/0
THE &AMX W/Ci. &**/&*!
US, A /¥^if/.

you WAVE tc* e>&

/?£&PoyVS/&L£r
/<** Y&U'&E &0/W& TO
C/SE A C-UE-C-K/M&

Acc&uMr.

'Amp tub owweR. oe The

COMPUTER. STOPS WILL.

0E UNNAPPy WHEN HE
PINO-S OUT WE- PONT
NAVE eNOU&U MONEY
//V OUP7 ACCOUNT TO
COVE* THE CHECK.

OP WE CAN GET MONEY

OUT Op OOP ACCOUNT AT AN

AUTOMATE? TGLLEP MACHINE-

(ATM), EVEN WHEN TH&

WHETHER ytDU CASH A CHECK OR WlTH0RA\N
MONEY AT A TELL.EP& WlNOOW OR ATM, YOu'PE
CONVEPTINO CHeCKING AND SAVINGS,
^ACCOUNT POLLARS /NTO PAPEP CuPPENCY ^^
ANP COIN. ~^_ ^^^**S

**

<*»!

0mk

f/M

Boy, nick, it ee&le, Goop
to get out oe that
■stupe y account.

AT LEA&T I
CAN PEST IN THE-\
VAULT, 0ILt-.WHEN\
I'M OUTSlOe- THE

Sank, i always
peel totally.
SP>SNT.

«<e.

- : cr.f.fifR

A/o. yve l&np ir to /npivipuacs, anp Businesses,,
except for 7ve amount we're R*£g?u/rep By
rue- pepeRAu /rese/rve 70 set asioe as.

WHats the
FBPBRAL f?BS£RV£?

THE COUNTRY'S CENTRAL BANK, CREATEP BY GOA/GR&SS
IN 1913 TO ENSUR'B- THAT TPEPE IS ENOUGH MONE-y
ANP CREPtT /N THE COUNTRY TO PROVIP& FOFf
eCONOMIC GROWTH. THE F£D HAS 12. PlSTPfOTS ANP A
30ARP OF GOVERNORS IN WA&.UINGT0N P.C THE
F^EPERAL fTES^RVE HAS A NUNf&ER Of=-
RESPONSlBlLITlES, INCLUDING MAYING SURE PRICES
APE S.TABL£- ANP TEi-LISVG 0ANKS TO SET- AS/PEr
A CERTAIAJ PORT/ON OF* THE/P PEPOSITS AS
f?E~&£-R?V£S>, EITHER AS CASH IN THEIR VAULTS OP IN
ACCOUNTS AT A REPEPSAL RESERVE- BAA/K .

THAT N1EANS> THAT /F A
BANK MAS A RESERVE
REQUIREMENT OF-

to percent:..

it mus;
SETA&IPE4I
/N RESERVE
pop EVERY

A /O PERCENT RESERVE REQUlREMENT
MEAA/& >OUR LAA/PC.ORPS BASJK COULP LEND

up to 9o pepcea/t op r«e $5~,oao, op
44,500, to the ownep? op the f/zzA
PARLOR a/ekt poop: so pe cam pat
for p/s. n&w KircueN.

& G©0Me&[3/fH£

v\r

the Pizza paplor o&a/er w/ll G/ve?
the constpuct/om ccwipaa/y a
m4lso0 check, amd the heap op
the coa/struct/oa/ compaa/y wll
pepo&it /t /a/ p/s 0aa/k pown
the street.

W/TH A /O PERCENT PE&eRVG REOU/REA4E/VT,
THE COA/STPUCT/OA/ COMPAAtylS &AA/K POVSA/

THE STREET COULD l^EA/P UP TO <?0 PERCEA/T
OP THE 44500, OR 4 V,OSD, 72> THE OWAdER

OP THE A40V/E TREATER A^A*OSS

THE OWA/EP OP THE PIOWE THEATER W/CJ. PEPOS/T TRE
■S Y, OSO CHECK /A/ TH/S 0AA/K . AA/O, WITH A fO PERCEA/T
PE&ERVE PTE~QU/REAslEA/T , Ix/ECAA/ LEAVP UR TO
QO PERCEA/T OE $ 4,OSO, OR $ 3,6¥^ 70 TRE"
OWA/EP? OP THE 0OOK ST0RE; So SHE c-A/V
0L/y A/£W 3O0*C* .

W/T/S As-/ OfZ/G/A/AL. ttBF&&/-r ©/=■ $ S,CCO AMD S/J&T T/SRee 77*AA/£ACT/&V£,
THP.BG BAA/K& GOT 4 /2>,5SC> /A/ A&tV 0£f*&tTS AA/O A^bejf/2,/9^

/as coaas-s. A U37- of=- /*toA/ey ss c/*eAT&& wmea/ -rue- BtAAS^s.

<Z#ep>/T <UAS/&/V&, AA/C SAv/A/GS, AVP COAASS. /A/ THE 1

C/fiS/re-P S79472£S <ser /a/wol-ved .

/p So aujcjs op r//e

A4ew&y P£f=i?£,/r£C>
eers l&ast out, i&w
ix? we ka/cw t/sat
rue baa/ a: iy/lc Be
Aece re &/ye u&
ac/p ajoa/ey &ac*A
h*/£A/ we~
wawt /rP

&AA/P& TPy 7t> A4AKB SAPe i-*WS,

A/t, «»/= <^ouf<se , r//£7?£'j=.

ALWAYS, fif/Ste. /S4/VXS ASA\AE
CAPSTAS- 7& PROTECT 7?/£MS>e/.ves>
AGA/A/ST t~£>&&, AA/P A^EOe^A/- AA/C
S-TATe P"G&Ut-ATOA*£, EXAArf/ASE
&AASKS 7D A4AKE £>CJf?£ T/SE y AKE
EA/GAG/ASG /AS SA&& AA/C
SOC/A/t? PPACT/CE5.

• r CH/fff; /Ay a/ot

<E>£TT/ASG A POLSe ..

/ KA/EVS /r WAS, &ICH

w«sv we exAM/A/ep ir la&t

YEAR . /'AA GO/ASG TO
RECOMMEND AA/ /A/eas/£tAS
OP CAPITAL. .

PUSS,, P£F*ds.iT& ARE
/AJSl//?£t? ay tPE FePCRAL.

Pepc&/r /a/^uraavce corp
aa/ agea/cy g>p ta/e

G>0\/ef?A/AA£,fSir- .

ft

T/SE&AA/K 0I0A/T SuPV/VS- .
&JT C&A/T PAAS/C, Wg

W/SAT SROUt-D W£ CO /P
We WAAs/T TO SeT S&/WC

A^oA/ey As/ce so we caa/
START PPOPUC/ASG 0TA/ER
sa/a<=./k& &esices.
Pf*GrTZeL& P.

^s-

77/AT!s A GCXX>

<$ues>T/OA/, rrtAHc/SGo,

THE S4V//V6S ACCOUNTS RA^/GG
from PASSBOOK &AV/A/&S aozounts
THAT AL^ow FREQUENT MTHPRAWACS
&ur &o>y RELAT/VELy tc>W AAFBA ,

to GGxrtr/cATe op- p*p&s/r (cc)

ACCOUNTS THAT RHy //A6HEK

abates our T/e ur youR AiaNEy
A=OR AS wttle as seven C**Y»
or as ljong As /o years .

/'M HEAD/NG TO
THE &GACU ROA?
THE- WEEKEND,
WANT TO GOME?

'SOUNDS L./KE?*

PUN, &UT /

WAVE 727 PASS. .

/'/* GO/sAG TD SE |

T/EP UP A&R

T»e NEXT

SO YEAR'S. .

be^

f*j

OR you MAY PREFER AN /AfTEREST -
&EAR/NG CHECk/NG ACCOUNT, SUCH

as. a A/eeor/ABf-E oppep <£>/<=
w/tuprawal (a/0in) account".
a/ow Accounts allow unl/m/tec
<zheca( wp/t/ng but l/sual-ly
peocj/re a man/mum balance /n
opper 7© earn /nterest.
&aa/rs also opa=er a40asg-y

MAPKET PEAVS/T AusouNTSfMMCA*)
WHICH Of:/=&f* C/M/7EP> CMSJX
WAT/T/AVG AND OETEA/ PEGU/PE
A M/NIMuM AVERAGE 0ALAA/CE-
TO AVO/O MCWTHLy iCHAPGES.

t'M NOT SURG WE CAN MA'NTA/AJ A
Art/N/MUM EACANCE PASSAT A/OW, So

/ tn/a/r we spoul-c start o **■*=■
w'tn a a7ex3ulaa? sav/aags
account: we'll, st/ll. gapsv _,

AAATEREST. P/O/ v'7- WE" g ^

CAN &AAJR ON tr,
EVELYA/, AND yoU'Ct,
GARAV /NTERGST BOTH
ON THE OPKB/NAL.
AMOUNT >OU PEPPS/T /N
THE ACCOUNT ANP ON ANy
/NTERGST >OU'VE ALREA£>y
GAR/VE-P AND LEAT /A/,
THE ACCOUNT . TV/ATS
CZALL.ED COA4POUAA&

IP we MAve jH^ogo
AND PUT IT IN AN
ACCOUNT P'AYINO
S PEPceNT COMPOUND i

/NTexe&T, in Pive-

MANY BANKS) A.L.SO
I-&S.UE CJZBP/T <ZAA*P£ ,
•SO YOU czAN Buy T~NC-
C.OMpaT£K YOU

mentioned 7&c>Ay

ANO PAY pOf* I7~

\nitu a cJtG&rr <zAf<c? , we
WOULDN'T HAVB TO f?Ay

THE ENT/&E- &IL.L- 47" CWCM.

/NST£AD, we COUL-D
SPP£AD eat? PHYMC/vTS out
oi^R MAW MONTHS AS
UoNS AS we A&tGB TO

Pay 7X/& ban* /NT/s'Resr.
Bxrr that /Nrepesrr adps.
r& out* TtrTAt. tf»S7" «>^=
o*snin& T»e GoMPure*.
0ai rue- or^ex hand,
we'p &£T r*& czcvApmreA:

WELL, I DOnY WANT TO GO INTO
P&BT PI&HT /YOW AND f/SAf &*/NeS*

&ADDL.&D INITt/ MONTHLY PAYMENTS

We'Pe- NOT P£ADY Pop! THAT
RC-&P>ON&/BH-rTY . / 77V//VA- l-v5»
•&UOUUIP 3TltZ/< TK- T/-IB- CfjeCK/NG,

AND SAY'/N&S, ACUZOUNT-&, ANO
TM/NK ABOUT TNEr OT7-/£PZ

K Bank ■se-ftvtc.es> LA-re*.

PART TWO - THREE YEARS LATER,
<S£7-77/ve MOltS opoeps, pop

oc/p PRETzeijs, sveky c>Ay.

D

D rt—i

u

WAIT U/VTIL. YOU TRY OZ*»

oe/w/Y's i.AT£&r
/A/versr/oNS .

-v\

in

\/7

cv

YGAH, PAPSA//P YUCCA., &wg£T"

potato, tapo , batata , aiu. K/nos.
op- exor/c veeeTAex-es app /r*

THAT S>0^yt- OA* C-H/PB . /'A*

rH&se-P /fa suae ou/?

CU£>TO/vi£R£> Mt-L. AVM/V7"
TO Bay TH£M FOR
7-UE/f* STOKES, .

/'LL PI&URE OUT HOW MUCH IT'LL

COST 7D EXPAND, MAKE copies
OF OUR FINANCIAL STATEMENTS,
ANO WRITE A 0U&I/VES& AMP

MARKETING FLAM.
THEN WE'LL. MAKE AN
APPOINTMENT IV/TH
A4F- &AA/KS .

TflySOME OP OUR GREAT /VEW
EXOT/C CHIPS, A1R.BAA/KS.

*£&£&? TO GETALOAAt 7t>
CXPANO OUR eU&Ne&S aa/O

//MMMM. tuese are &ood. but

yOCt A LOAN, /'/M EO/N& TO f^KVE
Tp-ASK ytXJ TO FILL OUT AN
APPUCAT/ON, So we c^A/ Do A
CREDIT CHECK .

/'ye heard

OP THE

k" v

Tt3 USE THE MOA/Ey TO

THE TH/fiD C /s eox COLLATERAL .
WHAT CAN \t*E USE 7Z>
Gt/ARAA/TEE THE LOAN //v
CASE yoWGE UNA&i-E TO

in that cas.b, we would use the

EQUIPMENT AS. >OUR COLLATERAL.
AND IT COULD BE TAKEN OVEP BY
THE BANK IF- YOU FAILED

to repay us.
Remember, when you take out a

LOAA/, ITS A t-E&AL. CONTRACT.

Th/S hAV, BOYS
WE'RE &OIN6 TO
have TO AUCT/ON
rr off-.

¥

THE FoupTH C IS FOR CAPITAL,
THE AMOUNT OF MONEY YOU HAVE

/NYESTEP IN )CHP 3US//VE*SS> .
THE 3ANK ALWAYS kVA/VTS A BoPPOWER
TO NAVS SOME OF HIS OR HEPi
CAPITAL /A/VESTED , /V07~ SU&T
THE B-ANK'S MO/VEY.

&

ks

l <U*g

K,

M

WE OWN ALL OUP
PRETZEL-MAKlNGr

EQUIPMENT
AND WE'VE SAVED
ENOU&H 7© PAy FOP

half the casror

THE CM/P-MAK/N&
^MACHINE.

AiC

r

77^47"
SOUNDS

REASONABLE '

^

THE FIFTH C IS FOP
CONDfT/ONS, or

ECONOMIC FACTCPS THAT d
MI&UT AFFECT yOUP
BUSINESS .

f-S*

>

I'D LOVE TO
RAY OFF THE- LOAN,
MP. BANKS, BUT I
CANT BECAUSE OF THIS\
DARN RECESStON. lots)
OF PEOPLE APE OUT
OF l>YOPK OP F^E-EL.
SQUEEZED
FINANCJALL.Y.

^*3S\ i

LONG-TERM LOAMS are

A &eger GAM&LE

&ECAUSE A COT CAN
CHANGE in
tO YEARS.

/ GUES& IT
WAS A MISTAKE

BORROWING
SO MUCH MONEY
/O YEARS AGO
TO START
/MAKING

record
players^

HOW COULD

'WE HAVE KNOWN

THEY WERE

GOING TO

/A/lsEA/T

COMPACT

d/scs t

wggi

AMD. THE DEMAND FOR MONEY
/N RELATION 70 THE AMOUNT OF
AtONEY AVAILABLE POP. LENDING^
ALSO DETERMINES
/NTERES T RATES-

A LOT OF PEOPLE WANT
'70 BORROW, BUT THEfSE
' ARENT MANY OF US HERE.
QCON THEY'LL RAVE TO ,
PAY A HIGHER RATE
OF INTEREST^

&THER STAY HEREl
/P / LEAVE YOU
f'LL BE "A LOAN.

V

GET IT?*

?$%££

5

Who determines the AMOUNT
OF MONEY BANtGS,
HAVE TO L£NO\^

WELL,

TO SOME EXTENT,
lT!S THE PEOPLE
AND BUSINESSES TTlAT
PEPOStT THE MONEY

that the bank lends
out. and to some
extent, its the
borrowers whose
loans take money

THE BANK.

THE FEDERAL RESERVE ALSO FLA
ROLE BECAUSE IT SETS RESERVE
REQUIREMENTS AND , AS A PESULT
DETERMINES THE SHARE OF THE
DEPOSITS THAT CAN
BE LENT OUT.

AYS A ]
RVE J

SULT,^d

heJ^^A

the feds actions INFLUENCE the money supply,

INTEREST RATES, AND THUS. THE PLANS OF-
&US/NESSES AND INDIVIDUALS To SAVE AND BORROW.

WHAT ABOUT IT, MR BANKS ? MLL.
YOU HELP OUR BUSINESS BY
RECOMMENDING,
OUR LOANP _

Wu MUST THINK'
OUR PRODUCT IS

PPETTK GOOD.
yOU ATE THIS WHOLE
BOIVL AND DIDN'T evENl

Set aside ANy
RESERVES.

-en,

~^-v

J

'm

■f*

*-■*

/'M NOT PROMISING, ANYTHING, BUT

you rave BEeyv good customers),

FOR THE: LAST THREE YEARS AND
yt>U HAVE A &OOP SNACK... ERKP.,1
I N1EA/V TRACK... RECORD.
WE'LL. TAKE A LOOK AT YOUR
APPLICATION AND BUS/AIESS
PLAN AND LET VOU KNOW .

-

OOOOH.

/ ATE-
SOAAANY

CRIPS ,
A/OtV I
THINK /'M
OVERFED.

APPLICATION

21,

tr sure uas>. ~
De/v/vy

LOST RtS HAIR.
BOUGHT A CAR
AMD OPENED A
CHECKING ACCOUNT.
WA/VO WE ALL STARTED
WEARING SUITS
TO WORK
EVERYDAY .

BESIDES THAT, WE'RE ONE OF THE
LARGEST SMACK PRODUCERS /N
THE WORL.D , AVD WE CX&0RT
TO CCX/NTR/£S ON RIVE?
CONTINENTS .

1 L

AND WE'RE GETTING CHARGED
THE "^RM4^*RAT£ ON OUR LOANS,,
THE INTEREST RATE BANKS

CHARGE TNE/R MOST
CREDIT-WORTHY CUSTOMERS .

.///.<r Tu/fiiis aos-ii rr

X"

DCAACAAC1C G> it/I IC AJ

nrtir\\

THROU&H OUR COMPUTER L/NK
TO THE BANK, WE CAN
TRANSFER FUNDS ELECT&ON/CAUY

FROM OUR ACCOUNT TO
ACCOUNTS AT OTHER 0AA//CS .

The bank defos/ts our EMFLor£E&\

WAGES ELECTRONICALLY /NTO THEIR \
ACCOUNTS AT OTHER BANKS, So
THEY OQN'T HAVE TO STAND ON U/N& J
TO DEFOS/T Tf-IE/R PAYCHECKS . ^^

2 3.

Federal Reserve Bank of New York

Public Information Department

33 Liberty Street

New York, NY 10045

(212) 720-6134
www.newyorkfed.org

To order publications online, go to:

http://www.newyorkfed.org/publications

Information about the Federal Reserve Bank of New York's
education programs can be found at:

http://www.newyorkfed.org/education

2008